Analysis: Are Berry Bros. & Rudd’s redundancies a sign of things to come?
Berry Bros & Rudd’s decision to make redundancies raises questions about how fine wine businesses are coping in an incredibly tough environment. Compounded by government changes to tax and duty that are disproportionately targeting wine businesses, is this a sign of things to come, db asks? The post Analysis: Are Berry Bros. & Rudd’s redundancies a sign of things to come? appeared first on The Drinks Business.
Berry Bros & Rudd’s decision to make redundancies raises questions about how fine wine businesses are coping in an incredibly tough environment. Compounded by government changes to tax and duty that are disproportionately targeting wine businesses, is this a sign of things to come, db asks?
What we know so far
Last week db broke the exclusive news that 30 roles would be cut from across the business at Berry Bros & Rudd (BBR), with a statement from CEO Emma Fox noting that this was affecting all departments. It had, she added been a “very difficult but necessary decision” on the back of the “extremely challenging global market conditions”.
While it is not known how many of these roles are UK-based, or in which parts of the business (which is understandable, given the impact on the staff involved) – this equates to around 7.5% of the business.
BBR is a strong business, with a long history, and a well-known and highly respected brand – but this doesn’t make them immune to the current pressure. In December it published its annual results on Companies House, in which it stated that turbulence in the fine wine market had had an affect on revenues, even though it had continued to invest and "diversify income streams".
While some may have questioned BBR's decision to venture into potentially “non-core” areas such as taking a minority stake in Cotswold Distillery in April 2023, and acquiring England’s oldest commercial vineyard, Hambleden Vineyards, in partnership with Symington Family Estates, the last few years have also seen the extension of its core business, including a new spirits shop and online auctions last year. This interesting move complements its core business by building on BBR's ongoing relationship with its private client customers.
Market-wide
But there can be no doubt that the industry has been hit hard in the last few years, as the "unprecedented" bull market during the pandemic turned bear. As Liv-ex's market commentary in recent months has shown, prices in the fine wine market are down around 20%, and the market has shrunk by around 30-40% in size since its peak. Obviously this has a material impact on turnover and margins across the board.
One industry insider told db that the wider fine wine industry was in “turmoil or crisis”.
"I don't think it's the time to be shy with one's dramatic words," he said. “The market is soft at the top end – if you talk to any of the fine wine traders, you’ll find their business has done anywhere between 30%-50% year-on-year from 2023 to 2024 and there's no sign that the tide is turning on that."
Whether things will start to move soon is hard to say. There have been pockets of stabilisation – and many of the older vintages of Bordeaux, from 2000 and earlier, are finding their level, but there are many younger wines around that have yet to do so.
On top of this, there is currently a lot of wine already in the global market, whether with négociants or in store for private customers, which is waiting to be sold through. “That will take a while, to put it mildly,” the insider said.
Not just the market
However, the global market for fine wine is only half the story. Compounding those challenged are the government changes that are making life very difficult. These range from the ‘reform’ of duty and the upcoming EPR legislation to hikes to employee NICs, IHT on business assets, changes to employment law, and rising energy costs – all of which add materially to costs.
“This is going to force all businesses to look very hard at their costs and for most companies people are by far and away their biggest cost,” another commentator said.
Indeed this was highlighted not only by BBR’s CEO Emma Fox but also by Steve Finlan of the Wine Society, in an article in The Telegraph this weekend. He noted that The Wine Society is facing an extra £5.5million in taxes this year as a result of the NI contributions introduced by Chancellor Rachel Reeves in the 2024 Autumn Budget. This will see the NI rate for employers rise from 13.8% to 15% in April while also lowering the threshold after which they start paying NI from £9,100 to £5,000.
As a result of these increases in costs, the Wine Society told the newspaper it has frozen hiring, as well as cancelled investment plans for the foreseeable future. Finlan warned that although the Wine Society is pressing on with a pay review of 3% this month (costing the company £500,000), other businesses might abandon plans for pay reviews, or pay less due to the high costs that are imposed on wine businesses.
In a statement issued by the WSTA last month, Hal Wilson, co-founder of Cambridge Wine Merchants, said that the duty situation alone felt like “death by a thousand cuts, or even two thousand cuts” that required a “herculean bureaucratic exercise” on the part of businesses.
The problem for the industry is that all of these things are coming at once, an industry veteran told db.
“All these ideas are digestible, some are even OK on their own – but to do them all at the same time is causing unnerving stress in the corporate world.”
“It's really tough and I don't know how the industry in general will navigate it.”
What we know so far
Last week db broke the exclusive news that 30 roles would be cut from across the business at Berry Bros & Rudd (BBR), with a statement from CEO Emma Fox noting that this was affecting all departments. It had, she added been a “very difficult but necessary decision” on the back of the “extremely challenging global market conditions”.
While it is not known how many of these roles are UK-based, or in which parts of the business (which is understandable, given the impact on the staff involved) – this equates to around 7.5% of the business.
BBR is a strong business, with a long history, and a well-known and highly respected brand – but this doesn’t make them immune to the current pressure. In December it published its annual results on Companies House, in which it stated that turbulence in the fine wine market had had an affect on revenues, even though it had continued to invest and "diversify income streams".
While some may have questioned BBR's decision to venture into potentially “non-core” areas such as taking a minority stake in Cotswold Distillery in April 2023, and acquiring England’s oldest commercial vineyard, Hambleden Vineyards, in partnership with Symington Family Estates, the last few years have also seen the extension of its core business, including a new spirits shop and online auctions last year. This interesting move complements its core business by building on BBR's ongoing relationship with its private client customers.
Market-wide
But there can be no doubt that the industry has been hit hard in the last few years, as the "unprecedented" bull market during the pandemic turned bear. As Liv-ex's market commentary in recent months has shown, prices in the fine wine market are down around 20%, and the market has shrunk by around 30-40% in size since its peak. Obviously this has a material impact on turnover and margins across the board.
One industry insider told db that the wider fine wine industry was in “turmoil or crisis”.
"I don't think it's the time to be shy with one's dramatic words," he said. “The market is soft at the top end – if you talk to any of the fine wine traders, you’ll find their business has done anywhere between 30%-50% year-on-year from 2023 to 2024 and there's no sign that the tide is turning on that."
Whether things will start to move soon is hard to say. There have been pockets of stabilisation – and many of the older vintages of Bordeaux, from 2000 and earlier, are finding their level, but there are many younger wines around that have yet to do so.
On top of this, there is currently a lot of wine already in the global market, whether with négociants or in store for private customers, which is waiting to be sold through. “That will take a while, to put it mildly,” the insider said.
Not just the market
However, the global market for fine wine is only half the story. Compounding those challenged are the government changes that are making life very difficult. These range from the ‘reform’ of duty and the upcoming EPR legislation to hikes to employee NICs, IHT on business assets, changes to employment law, and rising energy costs – all of which add materially to costs.
“This is going to force all businesses to look very hard at their costs and for most companies people are by far and away their biggest cost,” another commentator said.
Indeed this was highlighted not only by BBR’s CEO Emma Fox but also by Steve Finlan of the Wine Society, in an article in The Telegraph this weekend. He noted that The Wine Society is facing an extra £5.5million in taxes this year as a result of the NI contributions introduced by Chancellor Rachel Reeves in the 2024 Autumn Budget. This will see the NI rate for employers rise from 13.8% to 15% in April while also lowering the threshold after which they start paying NI from £9,100 to £5,000.
As a result of these increases in costs, the Wine Society told the newspaper it has frozen hiring, as well as cancelled investment plans for the foreseeable future. Finlan warned that although the Wine Society is pressing on with a pay review of 3% this month (costing the company £500,000), other businesses might abandon plans for pay reviews, or pay less due to the high costs that are imposed on wine businesses.
In a statement issued by the WSTA last month, Hal Wilson, co-founder of Cambridge Wine Merchants, said that the duty situation alone felt like “death by a thousand cuts, or even two thousand cuts” that required a “herculean bureaucratic exercise” on the part of businesses.
The problem for the industry is that all of these things are coming at once, an industry veteran told db.
“All these ideas are digestible, some are even OK on their own – but to do them all at the same time is causing unnerving stress in the corporate world.”
“It's really tough and I don't know how the industry in general will navigate it.” 
